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Wednesday, March 27, 2013

The Only Sure Fire Industry for the Next Two Decades?

In 1967, Mike Nichols directed a now famous film called “The Graduate.” Nominated for a fistful of Oscars, it told the story of a young man named Benjamin who had just graduated from college. He was a little bit uncertain about his future. Nichols won an  Oscar for Best Director that year and the film made Dustin Hoffman a star.

There are many famous scenes in the film but the one that is perhaps most frequently replayed takes place at a graduation party for young Benjamin (Hoffman).

It goes like this:

Mr. McGuire--“I just want to say one word to you. Just one word.”

Benjamin--“Yes, sir.”

Mr. McGuire--“Are you listening?”

Benjamin--“Yes, I am.”

Mr. McGuire--“Plastics.”

Well, these days I meet with and talk with many young people in different settings. Invariably, someone will ask me where the prospects are best for their upcoming careers. I suppose that they expect me to say get a job at Apple or Google or suggest that they take the ultra-safe route and go into nursing. Nope. I take a page from the fictional Mr. McGuire and say just one word to them. That word is agriculture.

The reaction is one of shock, sometimes humor and occasionally disgust. Few want to hear my reasons. Perhaps you will take a moment or two and read them.

On October 26, 2011 I published a Media Realism post entitled “Seven Billion and Counting.” According to United Nation projections, the global population was about to hit  seven billion people. By 2025, they forecast eight billion people. With 12 years to go, we seem to right on forecast with the eight billion people projection.

My question to you is simple--“How are we going to feed them?”  Well, there is no question that there will be better technology over the next decade in seed, irrigation, and pest control, and, at the same time, fertilizer and farming methods will improve. The big challenge is that approximately 700 million people have entered the middle class around the world in the last decade and that trend particularly in Asia, Latin America and Eastern Europe is likely to continue.

When people join the middle class, they eat more meat whether it be chicken, pork or beef. And, significant resources are used to grow such products. Some say that at times the growth in grain demand as one jumps from subsistence to middle class can be 10 to 1 as compared to their earlier, humbler lifestyle. Some 441 gallons of water are used to produce  a pound of beef. There are four pounds of soy and corn to produce a pound of pork. And, the newly arrived middle class around the world is not going to return to a meat free existence one they get used to the western diet.

So, it would appear logical that despite the gains in technology and farming methods that the price of grains would have to rise. Productive farmers such as those in America would have to be in a good spot.

Right now, the average age of the American farmer is 58. In Canada, I have seen estimates as high as 62. Young people need to get in to this industry if it is to meet its potential.

Someone wrote to me recently and suggested a good investment hedge for me would be to buy a farmette in Manitoba province in Canada. I could grow my own food on my five acre spread, live in an extremely safe location and occasionally make forays in to bustling Winnipeg. Well, at my age and personal lifestyle, that is probably not a good solution. Winter on the northern plains has little appeal to me. Farming, however, may be a viable and workable career choice for a great many young people.

You do not have to be a conventional farmer to get in on the action. Could a bright young man or woman sell equipment for John Deere and Caterpillar? Or, would a sales or marketing job at Potash, Agrium, Syngenta, or even controversial Monsanto make sense for young adults with marketing training? What about a job at Archer Daniels Midland, ConAgra or dozens of other companies across the globe that sell foodstuffs?

No matter what happens, people will have to eat and it appears that there will be a lot more people going forward. Agriculture seems nicely positioned given that many commodities still sell way under their all time highs. Sugar is a great example.

Some of these developments may not effect advertising but others will. Branded food companies will almost definitely have the wind at their backs as hundreds of millions join the middle class. Major food processors with global powerhouse brands will be in a very good place. They will spend billions in advertising and promotion, largely outside the U.S., to capture the new middle class. It will not happen overnight and commodity prices will fluctuate year to year but demographically it appears a certainty that smart farmers all over the world have a brighter future than they have had in many decades.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, March 21, 2013

Are You Still Media Agnostic?

In the past few weeks the Roman Catholic Church elected a new pope. He is Cardinal Jorge Bergoglio of Argentina. As the first Latin American and first non-European pope in hundreds of years plus being the first Jesuit to be named Bishop of Rome he has generated tremendous interest. News accounts continue to track his every move and talk radio has not been out of the loop. A panel of “experts” discussed the new pope on a popular program last week and wondered how Catholics around the world would respond to Pope Francis as everything he says is infallible.

At the time I was driving on an interstate so I grabbed the steering wheel a bit harder than normal and tried to focus on my driving. A few minutes later a caller got through who sounded off on the ignorance of the panel. The host cut him off and that was that. Why were the caller and I so heated? The pope is only considered infallible when he speaks ex cathedra which means “from the chair.” Only eight times in the 2000 year history of Christianity has a pope spoken ex cathedra meaning that the statement is a formal belief of the church (the last time was 1950 and the doctrine of infallibility was not clearly defined until 1870 at the First Vatican Council). It is highly unlikely that Pope Francis will ever deliver a ruling that will be considered infallible. So while whatever the pope says should be weighed seriously no practicing Catholic is under any obligation to agree with his statements on a wide variety of subjects.

Why do I bring this up now? Well, with the gaffes about infallibility rampant, I thought that it was time to address a misrepresentation that has popped up repeatedly in media departments and by agency principals when pitching business over the last several years. When talking about their approach to media mix or communications strategy many people will say,“we are MEDIA AGNOSTIC.”

I see and hear people do this and it really grates on me. Do you know what an agnostic is? The term was coined as best as I can tell by British biologist Thomas Huxley in 1869. His basic premise was that the existence of a deity or god is unknown and cannot be proven. Others have refined it to say that we humans simply do not possess the knowledge to provide sufficient rational proof that a supreme being exists.

Back when I was a student at a New England Catholic college, we were required to take a semester of theology and one of philosophy each year. Some of it was interesting and it was a usually an easy A or B. I never will forget how near the end of the term a student told the priest that he resented the theology requirement as he was a nonbeliever. The priest asked “are you an atheist or an agnostic?”  “Agnostic”, replied the young man. The normally genial priest got very red in the face and said something along these lines--"If you are an atheist, I could respect you. It takes courage to face the end of your life and say this is the end. There is no afterlife. When you call yourself an agnostic, you are saying there may be a god and maybe there is an afterlife, but I am too damn lazy to think it through.”  That certainly grabbed our attention and the young lad was a lot quieter going forward.

So, do you really want to say that you or your firm is media agnostic? Using the classic definition, it connotes that you do not have sufficient knowledge to make a clearcut media recommendation. Using the angry Irish priest’s definition you are saying that you are too lazy to sort it out.

In conversations with people I often say that I try hard to be lukewarm about media selection going in to a project. That is impossible as we all have certain track records especially with traditional media and, once you have some years behind you, there are a bagful of tactics that tend to be proven winners as well. Also, only say lukewarm. If you write it, the term looks dreadful on the page and comes off as indifferent.

So what should you do? Try the time honored zero based planning approach. Start with the proverbial blank sheet of paper and don’t allocate 75% of your budget before you start. Get back to the target and see where they are spending their time. What should you call this? Some like “media impartial” or “channel neutral” and I have heard “target preferred media.” Use whatever you want or invent your own term. Remember, of course, that strategy comes first and then the media allocation.

Please, my friends, do one thing. Give the term “Media Agnostic” the death that it deserves.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Friday, March 15, 2013

Media Planners--Read and Read Some More

I have always been a big reader. Most of my reading hinges around how markets work, the business of marketing, the growth of international business and finally, lots of history. If we do not know where we came from, how can we forecast where we are going? Admittedly, that is definitely not an original thought but one that I have clung to my entire adult life.

Today, despite a lighter day to day schedule and hundreds of people at times e-mailing me articles and suggesting new books to digest, I find it very hard to keep up with changes in media, advertising and global business trends. Yet, I still find it fascinating and stick with it.

At the risk of sounding like an angry old man, it has been hard for me to get younger people in advertising and at universities to read with the same passion. Part of it may be due to the reality that today people want things in short sound bites. Someone who texts 40 times a day is not going to have the patience to curl up with the marketing/advertising/media version of WAR AND PEACE. At the same time, I don’t think asking someone to read a magazine article or commentary from the web all that onerous. Suggest to a classroom full of business students that they read THE WALL STREET JOURNAL or NEW YORK TIMES every day to prepare for their futures and the room erupts in laughter.

Over the years, I have always found that if you read the business and trade press religiously, useful observations will come your way that can make you and, more importantly, your company look insightful in client meetings. I once worked with a CEO who told each new account management person to read all the trade books in his/her client’s category cover to cover. At the end of a year, he promised that the young account person would be a budding expert in the category. It was that simple!  He sheepishly admitted that no one had ever taken his advice. No one.

I have often asked young people why they do not read about their industry. Most shrug, some they that they have a life and people such as I do not, while others say they will do it only if it is on company time. To some I have asked the big question which is “If you plan to spend 35-40 years in this business, why not learn all that you can about it.” Some say that they are not that interested. My response then is pure tough love. “If you interest level is not high, why not leave the business. Why spent decades at something you do not love?” As you might expect, this does not play very well. :) Moral to young people--read a great deal about your field--you competition likely will not.

Sometimes outside reading can also be a big help. A number of years ago, I started plowing my way through Dumas Malone’s six volume series on Thomas Jefferson. On a new business trip, I packed the last volume with me and read some on the plane out to the session. The prospect was an urbane middle European. One of our account people said, “I will get him talking about soccer and he will love us.” I countered gently that I hoped our sophisticated prospect did not want to discuss the nuances of Kierkegaard’s writings or we would all be out of luck.

At dinner, things were going poorly, when our winsome account guy played the soccer card. The client prospect responded, “I hate sports and especially football which you call soccer. Remember what your President Jefferson said about such sports?”  The table grew silent until I chimed in “are you referring to the letter he wrote to his nephew about time management?” Didn’t Jefferson say, “Games with the ball do violence to the body and do not build character?” He lighted up like a Christmas tree, talked Jefferson for the next half hour to most people’s boredom and the presentation went fairly well the next day. We did not get the business but in the early days of e-mail he would frequently write to me and ask my opinion about using cable TV, varying copy lengths in TV spots, and many other topics. We were never friends but I won his respect simply because he saw me as an ad guy who read.

An authentic eminence grise in media planning prompted this post when he wrote to me recently about how catching even small facts here or there while reading can make a huge difference in your success or that of your brand’s. He says:
“And as always, the first to move and catch the wave will be the one in the best position to hold on to or even grow their share of market.  This is one more reason why I always told the people who reported to me -- every morning go through the entire newspaper.  It's amazing the things you come across serendipitously that might have a huge impact on how you plan media for a particular account”.

Champion golfer Gary Player was reputedly the first person to say, “The more I practice, the luckier I get.” I think you could rephrase it and say, “The more I read, the luckier I get.”

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Saturday, March 9, 2013

Brand Integrity

Today, you hear and read a great deal about brands and branding. I read about it constantly and find the majority of it vague and sometimes way off center. My favorite brand guru is Bill McEwen, who spent many years at Gallup and some major ad agencies. Now a brand consultant, he gives this definition of what a brand is: “A great brand is simply a powerful promise. This promise creates a very personal, emotional connection with consumers. But it’s not enough to have a big idea and it’s not enough to make a big promise. The promise must be KEPT....not just once, but at each and every consumer encounter. A great brand is much like a great marriage. It takes work, time, mutual respect, and evidence of real commitment.”

A brand is a promise. Isn’t that wonderfully concise?  This concept hit me by accident in my 17th summer when I visited Paris. After sleeping off some of the effects of my first transatlantic flight, my brother and I began walking through the city. We stopped and bought Coca-Colas from a vendor in a public park. Before we took a sip, we knew exactly what we were getting--the sugary water and caffeine gave us a buzz even though we had jet lag and the iconic bottle and consistent taste were just what we needed in our first trip off the North American continent. Today, Coke may be the most valuable brand in the world and it can be purchased easily in even the most remote areas of over two hundred countries. Several hundred million times a day, Coke keeps it promise to consumers again and again. Like it or not, the brand has integrity. And, with their advertising and promotion they have communicated trustworthiness to a few billion people around the globe.

The issue of integrity is something that has been a particularly important issue in many industries but the US auto segment is a standout if you are looking for a case study. Back in late 1977, I was home in Rhode Island for the Christmas holidays. My father’s health was declining and he asked me to go with him to a local car dealership as his vehicle needed service. We waited in a big room with other customers and had a great talk. While we were there, another customer was told that his engine needed a valve job which would cost several hundred dollars. He exploded to the service manager and produced his service book showing that he had dutifully come in every 4,000 miles for oil changes, tire rotation and other routine maintainance . The service manager started laughing and said something like “You don’t believe that service manual from Detroit, do you? Your oil should be changed every 2,000 miles.” He then went in to a lengthy discourse on American automakers “planned obsolescence” that would require most customers to buy a new car shortly after they had paid off the loan on their existing one. The irate customer said that the car company was dishonest. The sales manager continued laughing and said “write a letter to Detroit if it will make you feel better.”

As a boy, I often heard the line “As General Motors goes, so goes the country.” It was the largest industrial company in the world and for a long time had the highest stock market capitalization. It was a fairly accurate bellwether of economic activity. Clearly, by the 1970’s, the company had lost its way. The products were not as good as they had once been. The brand had lost integrity.

Compare that to an upstart company from Japan, named Toyota. Launched in 1937 in Japan by Kiichrio Toyoda, the company grew very slowly and was certainly set back by World War II. Always, however, there was a focus on reliability and the customer. Just after the company rolled off its first vehicles, Toyota executive Shotaro Kamija was quoted in the Tokyo press as follows: “The priority in receiving benefits from automobile sales should be in the order of the customer, then the car dealer, and lastly, the maker. This attitude is the best approach in winning the trust of customers and dealers and ultimately brings growth to the manufacturer.”

It seems as if Toyota had brand integrity built into their corporate DNA!  As the 1970’s began, Toyota began to make inroads in to the American market. The cars were inexpensive, reliable, and energy efficient which had great appeal as we had the first gasoline shortage in 1973. Detroit did its bit by not producing the best cars.

Back in 2005, Detroit laughed at Toyota as they faced a major test. Toyota actually recalled more cars in 2005 than they sold in America. They cleaned up their act and recalls dropped 83% over the next two years. Then, a major problem hit in 2008. Certain Toyota Tacoma trucks manufactured between 1995 and 2000 had frames that were corroding from the inside out. Research showed that it was most acute in areas with large snowfalls and heavy salting of roads.

Toyota offered to buy back the cars from consumers at 1.5 times the Kelley Blue Book rate. The offer was made to 813,000 owners. Toyota behaved splendidly. Some of the vehicles were 13 years old and management could have hidden behind warranty agreements. They did not just do the legal minimum. They went the extra mile for sure. The result was that many people took their rebate checks and went to their nearby Toyota dealer and purchased a new car. A few years ago, Toyota received some bad press with a Prius recall (I have two and they handled everything to my cranky satisfaction!) but have seemingly put that behind them as well.

Toyota is now the largest automobile manufacturer in the world although a resurgent GM is nipping at their heels with their new improved products.

So, may I urge you to think about the brands you work for or represent? Many of the problems that the brand may be experiencing could be a lack of brand integrity.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Friday, March 1, 2013

Retail Closings and Advertising

By this time of year, business analysts are beginning to take stock of the consumer economy. Forecasts now abound for retail store closings for 2013. The December 2012 holiday selling season was somewhat underwhelming and GDP estimates for 2013 are muted at best.

Here is a composite of what many are forecasting for retail store closings in calendar 2013.  In no particular order, we find:

J.C. Penney--300-350 store closings

Best Buy--200+

Sears Holdings--KMart 200+
          Sears 100+

Office Depot--150
Office Max--150

(These two companies are merging so this number could go higher especially if a number of stores are in close proximity to one another)

Radio Shack--350

Right now, the consumer is approximately 70% of the U.S. economy. Some people talk about the coming renaissance of the US industrial base but, realistically, that is going to take years if it is going to happen. So, the consumer still drives the bus in the US economy.

With all these projected closings, does this mean our economic future is all gloom and doom? Well, what is really going on? In a free market economy, there is always an ebb and flow of relative corporate strength.  Harvard economist Schumpeter described it as “creative destruction” over 70 years ago. When it comes to retail, there is almost a fashion cycle in evidence. A few years back, some were saying that Sears would soon be back on track. Hedge fund manager and brilliant financial engineer, Eddie Lambert was taking over Sears Holdings which also included K-Mart. Many thought that he could unlock hidden value in the two chains and they would become big players again. Lambert, as brilliant as he is, had little hands on retail operating experience and things have yet to turn around. Yet, is it is his fault? When I sent a draft of this post out to several Media Realism panel members, a young media strategist fired back--"Sears? Radio Shack? Do those chains still exist? I thought that Target and Wal-Mart killed them both.”

Other chains seem to be having trouble with major e-commerce competitors such as Amazon.com.  More than one retail analyst has described Best Buy as now being little more than a showroom for their rivals online businesses. Best Buy will try to fight back by matching prices but it seems the consumer mindset is turning away from them.

What is succeeding in retail these days? There are always niche players and new concepts that capture the imagination of American consumers. As a group, though, it is the extreme value section that is really thriving. Family Dollar stores added some 475 locations last year and has 500 new openings slated for 2013. Dollar Tree has similar percentage gains in store count as well. They do a great job appealing to low income and financially stressed customers many of whom have no credit cards and are completely unbanked.

This should tell us something. Nobel laureate Joseph Stiglitz continues to hammer away in interviews and articles about how the American middle class is “being hollowed out.” Looking at these retail numbers he is definitely on to something when the most dynamic growth is coming in the extreme value sector.

Over the intermediate term, this trend in retail is not good for either media properties or advertising agencies. May I suggest that you run some tabulations on the extreme value sector? You will find that they are not lusty buyers of conventional media and use even less digital options as a strong plurality of their customer base may well be totally offline.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com